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Tuesday, 30 December 2014 00:00
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Exclusions for defence & infra, no cheer for industry

Given how the UPA has made land acquisition – including purchases by the private sector – next to impossible in terms of both costs as well as time taken, the NDA government has done well to try and untangle the knot to a large extent. Of course, getting the Ordinance on this through Parliament will still be an uphill task given how the Opposition has been behaving; perhaps the government will have to try and get a joint session convened to ensure the land Ordinance gets ratified. There is, based on the broad details announced by finance minister Arun Jaitley on Monday, still no relief for industrial projects where land can either be bought by the private sector firm or be acquired for it by the government. In these cases, social impact assessments will have to be done and, after this, compensation including R&R will have to be paid. Given the timelines in the earlier Act, this could mean a delay of up to 5 years in just land acquisition. Of course, the saving grace here is that it is up to the states to decide at what threshold level these provisions will apply if land is bought by the private sector. In the case of 13 Acts including the National Highways Act, the cost of buying land will go up dramatically since the compensation and R&R provisions of the Land Acquisition Rehabilitation and Resettlement Act (LARR) will apply. Once again, a lot depends on each state. So, while the original LARR envisaged a ‘factor’ of between 1 and 2 to be applied to the ‘market value’ of the land in rural areas – a ‘solatium’ equivalent to this was also to be paid in addition – Maharashtra’s draft LARR had kept the factor at 1.

 

And contrary to what finance minister Arun Jaitley had been saying till recently, the ordinance provides significant relief to not just PPP projects. Five areas have been demarcated for relief, and land acquisition in these areas will not be subject to either social impact assessments – which not only take time, but can also derail a project on grounds it is not really beneficial – or the consent clause where 80% of people have to agree to the project. These 5 areas include defence and defence production – along with the recent changes in FDI rules and faster clearances of defence orders, this is a big boost for defence production and make-in-India. Others sectors which will get relief include rural infrastructure including electrification, affordable housing, industrial corridors and the townships that are part of them, and infrastructure under PPP provided – in the last case – the ownership of land remains with the government. As in other cases, land acquisition/purchases will have to pay the compensation and R&R as per the LARR Act. For those interested in developing projects, one big bottleneck has been removed; it is now up to the states to help smooth land acquisition/purchases for areas not touched by Monday’s Ordinance. Given how the government has kept the interests of farmers paramount by making no change in compensation or R&R for any category of buyer, including the government itself, the ordinance should ordinarily sail through Parliament. But these are not ordinary times, so a joint session may still have to be resorted to. 

 

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